Meiji exits China dairy business after losses top over USD 47.2 million

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Meiji Holdings is exiting its dairy business in China after agreeing to sell its drinking milk, yoghurt and business-to-business (B2B) operations to Shanghai AustAsia Food in a deal worth up to RMB 320 million (USD 47.2 million), marking a strategic shift towards higher-priority businesses, including chocolate. 

The transaction includes Meiji's dairy operations under Meiji (China) Investment, Meiji Dairies Tianjin and Meiji Dairies Suzhou. Before completion, Meiji will transfer the businesses into a newly established subsidiary, which will then be sold to Shanghai AustAsia Food, leaving the Japanese company with no ownership in the operations.

The deal is expected to close on December 31, 2026, subject to regulatory approvals and customary closing conditions.

China losses drive portfolio overhaul

The divestment comes as Meiji reshapes its China operations amid changing consumer preferences, rising competition and higher raw material and logistics costs.

The businesses being sold generated net sales of RMB 422 million (USD 62.4 million) in 2025, while recording an operating loss of RMB 155 million (USD 22.9 million), compared with sales of RMB 403 million (USD 59.5 million) and an operating loss of RMB 144 million (USD 21.3 million) in 2024.

Separately, Meiji (China) Investment reported a net loss of RMB 1.04 billion (USD 153.6 million) for the year ended December 2025, more than doubling from RMB 490 (USD 72.38 million) million a year earlier.

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Chocolate business to remain a priority

Following the sale, Meiji plans to redirect investment towards priority businesses in China, particularly its chocolate operations.

The company's Guangzhou manufacturing facility is excluded from the transaction and will continue operating as a chocolate production base after production of the affected dairy products ends.

Meiji will also retain intellectual property rights and selected yoghurt brands, including those linked to lactobacilli, which are excluded from the transaction.

In addition, the company plans to enter into a limited-term trademark licensing agreement with Shanghai AustAsia Food, allowing the buyer to use selected Meiji brands under strict quality standards and audit requirements.

Existing partnership supports transaction

Shanghai AustAsia Food is a subsidiary of AustAsia Group, in which Meiji already owns a 15.85 per cent stake.

The companies have an existing commercial relationship covering raw material procurement, and Meiji said integrating the acquired business with AustAsia's operations could improve manufacturing efficiency, distribution, raw material sourcing and plant utilisation.

In its filing to the Tokyo Stock Exchange, Meiji said it had implemented measures to address potential conflicts of interest, including appointing external experts to ensure the fairness and transparency of the transaction.

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